Canada faces flat E&P year Lehman survey says 2004 upstream spending at C$13.6 billion will be close to 2003; at $2.3 billion EnCana leads field of 58 companies in North America Gary Park Petroleum News Calgary correspondent
The feverish pace of drilling, well licensing and land buying in 2003 is expected to level off in Canada this year, according to a capital spending forecast by New York-based investment bank Lehman Brothers.
A survey of 58 E&P companies projects spending (all amounts in U.S. dollars unless otherwise indicated) of $13.64 billion in 2004, compared with $13.67 billion last year. Calculations covering a longer list of companies point to spending of about C$27 billion (about US$20.8 billion), up from C$26.9 billion (US$20.7 billion) in 2003.
In keeping with their drilling activities, the list of spenders will be led by EnCana at $2.31 billion, a gain of 5 percent over last year; Canadian Natural Resources $1.19 billion, also up 5 percent; and Husky Energy, $1.28 billion unchanged.
For those with operations in the United States, EnCana is set to spend $960 million in the United States, 32 percent ahead of 2003 and Nexen plans to invest $320 million in the Gulf of Mexico, 34 percent ahead of last year.
Of the five Canadian-based companies with major activities beyond North America, Talisman Energy has budgeted $881 million, EnCana $580 million, Canadian Natural $530 million, Petro-Canada $490 million and Nexen $310 million.
Reflecting the pressure on companies to reach outside their domestic base, those same five spent C$8 billion buying international assets in 2002.
Because many companies were still engaged in their budgeting process, some of the spending estimates were developed by Lehman Brothers.
During last year’s robust commodity prices, 62 percent of Canadian companies raised their initial budgets, 21 percent made no changes and 17 percent under-spent, compared with 40 percent of U.S. independents, 27 percent of U.S. majors and 35 percent of other international companies who over-spent their budgets. Worldwide, 43 percent of companies spent more than they originally budgeted, 27 percent made no change and 30 percent spent less than planned.
The survey said the most important factors in E&P spending this year, in order of priority, will be: Three-dimensional and four-dimensional seismic; fracturing technology (which has made the greatest gain);horizontal drilling; directional drilling; reservoir recovery optimization and intelligent well completions.
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